There remains plenty of room to accelerate economic growth moving into the fourth quarter of the year, with domestic consumption and investment set to be the key drivers for Vietnam’s growth during the remainder of the year, according to insiders.
This comes after the General Statistics Office (GSO) revealed that gross domestic product (GDP) during the opening nine months of the year is estimated to witness an increase of 2.12% against the same period from last year.
Although this marks the lowest growth rate in comparison to the same period over the past decade, the nation has become one of the few economies to experience positive growth due to the novel coronavirus (COVID-19) pandemic seriously impacting many socio-economic aspects of countries globally.
Furthermore, the country is anticipated to become the second nation to enjoy a rapid economic recovery in the Asia-Pacific region, according to the S&P Global Ratings (S&P).
This optimistic outlook for economic growth can be attributed to Vietnamese success in containing the epidemic, while simultaneously maintaining economic activities in localities that remained unaffected by the health situation.
Despite the COVID-19 epidemic severely disrupting international trade, export and import activities recorded a positive growth rate, with a record trade surplus of US$16.99 billion over the opening nine months of the year.
Most notably, the domestic economic sector continued to act as the driving force for Vietnamese export growth, with the sector grossing US$71.83 billion in export turnover, representing an increase of 20.2% and accounting for 35.4% of total export revenue.
Moreover, September’s trade and service activities bounced back, whilst tourism and consumption stimulus packages were also deployed in an effective manner.
Despite local businesses facing plenty of hurdles, domestic enterprises operating in the manufacturing industry remain optimistic about the production situation moving into the year’s fourth quarter.
Investment has yielded a number of positive results, with social investment capital reaching VND1,445.4 trillion, an annual increase of 4.8%, while public investment is estimated to stand at VND 327,900 billion, an increase of 31% on-year.
Whilst there are plenty of bright spots to take from the nine-month economic picture, the Vietnamese economy is still facing up to a number of challenges, largely because the COVID-19 epidemic has yet to be brought under control in several countries worldwide.
Some international organisations have therefore warned about the risks of global financial instability and challenges facing the industry and construction sectors, with COVID-19 hampering major export markets due to disruption caused to global supply chains.
Consumption endured a slow recovery in the reviewed period, with total retail sales of goods and services rising by only 0.7%, proving that people have yet to return to their previous consumption habits.
Nguyen Thi Huong, director general of the GSO, says the local economy will continue to undergo obstacles moving forward due to the increasingly complicated and unpredictable situation occurring in the global economy.
However, she also notes that the country will see positive growth momentum moving into the fourth quarter, with the year’s growth target of between 2% and 3% being feasible. Indeed, the gradual recovery of the world economy is anticipated to help increase the consumption demand for goods.
With consumption set to rise, the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) is also expected to help Vietnam restore its export activities to the EU market, traditionally a major export market for the country, Huong stressed.
Economists believe that there remains plenty of room to accelerate economic growth in the fourth quarter of the year by ensuring supply sources remain in place for essential items, therefore boosting exports and expanding into new markets, whilst also seeking new partners.
Experts therefore underscore the importance of deploying economic stimulus schemes at appropriate times to take full advantage of the domestic consumption market and remove hurdles that businesses face.
Dr. Nguyen Dinh Cung, former director of the Central Institute for Economic Research, underlined the need to mobilise resources in a bid to serve major projects and select the best investors, therefore accelerating sustainable economic growth during the remainder of the year and into next year.
Currently, the Vietnamese government is determined to implement the "dual goal" of pandemic prevention and control and socio-economic development.
In order to fulfill this goal, Huong puts forward the need to spread information about the consumption of local goods, speed up the disbursement of public investment, adjust production plans, and forecast market demand. This should be done while simultaneously regulating monetary policies, interest rates, and exchange rates in a flexible manner.
Vietnam’s GDP growth this year can reach 2 – 3 percent, according to former director of the General Statistics Office (GSO) Nguyen Bich Lam.